WHY ORGANIZE?

Cooperation and International Institutions

After Hegemony
Robert Keohane

Chapter 1
How cooperation has been, and can be, organized in the world political economy when common interests
exist.
 20th century politics- gloomy politics
o Changing relations of the great powers
 World War 1
 World War 2
o The Belle Epoque
 The working classes of the center were no longer the “dangerous classes” they had been
during the nineteenth century and the other peoples of the world were called upon to accept
the “civilizing mission” of the West.
 First Industrial Revolution
 Advent of Globalization
 Iron Law of Wages- economics positive
o David Ricardo
 He argues the rise and fall of the price of labor is determined by many factors.
 salary’s power to satisfy the laborer’s need
 availability of labor
 investment capital increases, the prices of labor will also increase.
 Increase in population, which can either increase or decrease the price of the labor.
 Cooperation is still scarce
o Rapid growth of international economic interdependence of 1945 and the increasing involvement of
governments of modern economies have produced potential points of friction.
 Effects of Interdependence
o ‘’Interdependence leads democratic governments to expand state activity in order to protect their
citizens from fluctuations in the world economy’’ (Cameron, 1978).

REALISM, INSTITUTIONALISM AND COOPERATION

INTERNATIONAL POLITICS
Under what conditions can independent countries cooperate in the world political economy? In particular,
can cooperation take place without hegemony and, if so, how?
 World politics as ‘’state of war’’ (Keohane, 1984)
 ‘’A competition of units in the kind of state of nature that knows no restraints other than those which the
changing necessities of the game and the shallow conveniences of the players impose" (Hoffmann, 1965, p.
vii).
 STATE OF ANARCHY: no authoritative government that can enact and enforce behaviors
 Kenneth Waltz: States will cooperate if it will serve their individual interests; REALISM
1. States have similar function
2. Difference in terms of capability
3. Anarchy is the organizing principle of international relations
 Institutionalism: economic interests create a demand for international rules and organizations.
 Institutions as "recognized patterns of practice around which expectations converge" (Young, 1980, p. 337).
o Affects state behavior
 International regime- rules, norms, behaviors, procedures
o Realists: It is based on the political hegemony of the US
 ‘’ From a strict Institutionalist standpoint, the increasing need for coordination of policy, created by
interdependence, should have led to more cooperation. From a Realist perspective, by contrast, the
diffusion of power should have undermined the ability of anyone to create order.’’ -Keohane, 1948,
9

COOPERATION AND VALUES

‘’Some cooperation is a necessary condition for achieving optimal levels of welfare; but it is not sufficient, and more
cooperation may not necessarily be better than less.’’

 It is easier to maintain than to create an international regime

o ‘’When shared interests are sufficiently important and other key conditions are met, cooperation can
emerge and regimes can be created without hegemony’’
o ‘’ Regimes may be maintained, and may continue to foster cooperation, even under conditions that
would not be sufficiently benign to bring about their creation. Cooperation is possible after hegemony
not only because shared interests can lead to the creation of regimes, but also because the
conditions for maintaining existing international regimes are less demanding than those
required for creating them.’’

HARMONY, COOPERATION AND DISCORD

 Harmony refers to a situation in which actors' policies (pursued in their own self-interest without regard
for others) automatically facilitate the attainment of others' goals. (i.e. hypothetical competitive market-
world: Invisible Hand)
o COOPERATION IS UNNECESSARY.
 Cooperation requires that the actions of separate individuals or organizations—which are not in pre-
existent harmony—be brought into conformity with one another through a process of negotiation, which
is often referred to as "policy coordination."
o Occurs when actors adjust their behavior to the actual or anticipated preferences of others.

KENNETH WALTZ: IN ANARCHY, THERE IS NO HARMONY.

 Lindblom’s Adaptive adjustment: one country may shift its policy in the direction of another's preferences
without regard for the effect of its action on the other state, defer to the other country.
 COOPERATION DOES NOT IMPLY THE ABSENCE OF CONFLICT.
 Reaction to a conflict/potential conflict
 Governments enter into international negotiations in order to reduce
the conflict that would otherwise result.
 Any act of cooperation needs to be interpreted within the context
of related actions and of prevailing expectations and shared beliefs
before its meaning can be properly understood.
DEFINING INTERNATIONAL REGIMES

International regimes are "sets of implicit or explicit principles, norms, rules and decision-making procedures
around which actors' expectations converge in a given area of international relations. (P.57)

Norms simply as standards of behavior, whether adopted on grounds of self-interest or otherwise. (p.57)

 Principles, norms, rules, and procedures all contain injunctions about behavior: they prescribe certain
actions and proscribe others.
 Issue-areas are best defined as sets of issues that are in fact dealt with in common negotiations and by
the same, or closely coordinated, bureaucracies, as opposed to issues that are dealt with separately and in
uncoordinated fashion
 In world politics, the principles, norms, and rules of regimes are necessarily fragile because they risk
coming into conflict with the principle of sovereignty and the associated norm of self-help.

BALANCE OF POWER THEORY: Kenneth Waltz

o ‘’ Cooperative endeavors such as political-military alliances necessarily form in self-help
system. Acts of cooperation are accounted for on the grounds that mutual interests are sufficient to
enable states to overcome their suspicions of one another.’’ (Waltz, 1979 as cited in Keohane 19--)

FOR REALISTS: International regimes will be shaped by its most powerful members, pursuing their own interests.

CHAPTER 6: A FUNCTIONAL THEORY OF INTERNATIONAL REGIMES

 International politics is in a state of self-help. But with contrasting interests of the actors, how can
ensure cooperation?

COASE THEOREM: ‘’ the presence of externalities alone does not necessarily prevent effective coordination among
independent actors’’
 Bargaining could lead to solutions that are pareto-optimal
o Example: Laundry factory and paint factory ($20,000 US Dollars for indoor drying equipment;
$10,000 for Elimination of air pollutants | coase: the laundry will pay more than 10 but less
thn 20 to ensure coop bargaining-cooperation)
 ‘’Efficient arrangements could be consummated even where the rules of liability favored producers of
externalities rather than their victims.’’ (pp.99)
o a legal framework establishing liability for actions, presumably supported by governmental
authority;
o perfect information
o zero transaction costs

THE NEED FOR INTERNATIONAL REGIMES

LEGAL LIABILITY- not enforcement but mutual expectations

 No interference/Self-help
o WILLIAM FELLNER: QUASI-AGREEMENTS
 ‘’Legally unenforceable but help to organize relationships in mutually beneficial way’’
(Lowry, 1979, p.276)
o CONVENTIONS
 ‘’Actors conform to not because they are uniquely best, but because others conform to
them as well’’ (Hardin, 1982; Lewis, 1969; Young, 1983).

TRANSACTION COSTS
 International regimes reduce transaction costs of legitimate bargains and increase them for illegitimate ones.
  International regimes also affect transaction costs in the more mundane sense of making it cheaper for
governments to get together to negotiate agreements. It is more convenient to make agreements within a
regime than outside of one.
 Without international regimes linking clusters of issues to one another, side-payments and linkages would
be difficult to arrange in world politics; in the absence of a price system for the exchange of favors,
institutional barriers would hinder the construction of mutually beneficial bargains.
o successful regimes organize issue-areas so that productive linkages (those that facilitate
agreements consistent with the principles of the regime) are facilitated

UNCERTAINTY AND INFORMATION

 Even with the presence of contradicting and mutual interests, one actor can still deceive or double-
cross the other.

1. Asymmetrical information
‘’International regimes help governments to assess others' reputations by providing standards of behavior
against which performance can be measured, by linking these standards to specific issues, and by providing
forums, often through international organizations, in which these evaluations can be made’’ (pp.95/108)
2. Moral Hazard and irresponsibility
SELF-SELECTION
 Self-selection means that for certain types of activities—such as sharing research and development
information—weak states (with much to gain but little to give) may have more incentive to participate than
strong ones, but less incentive actually to spend funds on research and development. Without the strong
states, the enterprise as a whole will fail.

USES OF INTERNATIONAL REGIMES

 In general, regimes make it more sensible to cooperate by lowering the likelihood of being double-crossed.
 ‘’ they permit governments to attain objectives that would otherwise be unattainable. They do so in part by
facilitating intergovernmental agreements’’ (pp.110)
 The regime provides procedures and rules through which such sanctions can be coordinated. Decentralized
enforcement of regime rules and principles is neither swift nor certain. Yet, in many instances, rules are
obeyed,
 Effective international regimes facilitate informal contact and communication among officials


COMPLIANCE
 Why governments, seeking to promote their own interests, ever comply with the rules of international
regimes when they view these rules as in conflict with their "myopic self-interest."
o Myopic self-interest refers to governments' perception of the relative costs and benefits to'them
of alternative courses of action with regard to a particular issue, when that issue is considered in
isolation from others. An action is in a government's myopic self-interest if it has the highest expected
value of any alternative, apart from the indirect effects.
 For HANS MORGANTHEU: ‘’national interest>world objective’’
After Victory
John Ikenberry

Chapter 1: How to create and maintain order in a world of sovereign states?

Three fundamental questions:

1. First, what is the essential logic of state choice at these postwar moments when the basic organization
of international order is up for grabs?
2. What is the explanation for the growing resort to institutional strategies of order building?
3. Why has the 1945 postwar order among the advanced industrial countries been so durable, surviving the
dramatic shifts in power that accompanied the end of the Cold War?
 After a major war, new distribution of power emerges, creating new asymmetries between powerful
and weak states.
 What to do with power?
o DOMINATE- use its commanding material capabilities to prevail in the endless conflicts over the
distribution of gains.
o ABANDON- wash its hands of postwar disputes and go home
o TRANSFORM- favorable postwar power position into a durable order that commands the
allegiance of the other states within the order.

Three arguments:

1. The character of order after major wars has changed as the capacities and mechanisms of states to restrain
power has changed.
a.